Homespun Wisdom
Won’t that lower prices? “Uh, yeah,” Peterson admitted uncomfortably. “Typically that’s what you see.” Realizing, perhaps, that this undercut his “buy now” argument, the pep fell out of his voice. “I may have had too much coffee,” he lamented.
HSU Economics Professor Erick Eschker wasn’t too impressed with the three-month streak of price increases. “Look at March of this year versus the peak in March of ’06,” he said. “The median price fell from $349,500 to $265,000. That’s the broad trend you look at.” As for the current market, Eschker suggested checking the price-to-rent ratio. “That, to me, is the single most telling graph,” he said.
From 1989 through 2002, the ratio hovered between 12 and 18 percent. As the bubble inflated, home payments skyrocketed to 30 percent above the average rent payment. While that gap has closed slightly in the last two years, it remains above 20 percent. “And now we’re in a recession,” Eschker said. “Just wait ’til all these furloughs start hitting Humboldt State and other state workers.”
Still, Peterson said, recovering from his momentary lapse, the stats show that if you buy a house and hold onto it for at least five years, you won’t lose money. “This is probably gonna come across as a cliché,” he said, “but it’s still is a very good time to be a buyer.”
Pass the salt.
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